What Is Geofencing Marketing and How Can It Help Your Brand?

The tactic is currently having a moment, with pundits declaring that it is “totally changing marketing” and saying that it could fundamentally alter how businesses engage consumers.

Despite this, many brands remain apprehensive about geotargeting.

In part, this hesitancy is due to a lack of knowledge about what it is and a wariness in having to learn about—yet another—tactic.

It’s also rooted in concerns about whether the excitement is founded more in hype about a hot new technology rather than in substantive benefits for marketers.

So, how does geofencing work? Are brands successfully using it? Can it make marketing efforts more effective? Is it truly a transformative approach?

Here are the basics of what marketers need to know:

What Is Geofencing Marketing?Put simply, geofencing is very much what it sounds like: it’s an approach in which you create virtual boundaries (the “fencing”) in order to delineate a real-life physical area (the “geo”).

In other words, geofencing is when you carve out a zone, such as a neighborhood or building, on a digital map.

The marketing element comes in when people break the virtual barrier and enter into the specified area. Once the boundary is crossed, the geofenced campaign is triggered and targeted messaging is delivered.

How Is It Implemented?There are four main elements to geofencing: the barrier, the crossing, the messaging, and the permission.

First, a barrier is pre-set using some sort of digital interface tied to geography. This is often done by specifying a city (“Tampa Bay”), address (“5 Spruce Street”), or radius (“within five miles of 5 Spruce Street”). It’s also often done by drawing on a digital map.

Next, you have to know when someone enters the area. This is primarily accomplished with a mobile phone. Basically, because most people now have smartphones that are both Internet-enabled and have GPS built in, it’s easy to know where an individual crosses into a pre-defined zone (beacons is a related approach that’s often lumped in with geofencing, but it relies somewhat on different technologies—primarily Bluetooth).

After the person crosses the threshold, the third step is to message them. This can be done in a range of ways, including via text messages, app notifications, and digital ads. What’s needed is a mobile-friendly communication method and an underlying delivery platform.

Finally, something which brands often forget about when starting with geofencing, is permission. For a geofenced campaign to be successful, you need to know where a person is and you need to be able to reach them. This means that it’s necessary for the consumer to both allow you to access their GPS information (geolocation turned on) and to opt-in to receive messages from you (notifications turned on, etc.)

How Is Geofencing Being Used by Marketers?The possibilities for geofenced campaigns are almost endless, and many of the most interesting ideas are just starting to be experimented with by marketers.

That said, there are a few core approaches which are currently used fairly widely. These include:

Brand App Engagement: Consumers download an app and are prompted via a notification (encouragement to shop, coupon, offer, etc.) when they enter the geofenced area.

Text Engagement: Consumers opt-in to receive text messages on their mobile phones from a brand. Messaging is delivered via a text when the geofenced area is entered.

Third-Party App Engagement: Consumers download a third-party app, such as a couponing app or restaurant locator, and a brand’s geofenced messaging is delivered via that program.

Social Media Ads: Consumers enter a geofenced area and a brand’s ads appear in the context of a social media feed, such as via Facebook’s Local Awareness

Web Ads: Consumers enter a geofenced area and a brand’s ads are delivered—via units such as Google’s targeted AdWords—as they web surf/search, etc.

Fundamentally, each of these has its pluses and minuses, so the right approach depends on your campaign goals.

What Are Some Examples of Brands Using Geofencing?So, how are brands using geofencing to engage customers? Here are a few examples of real-life marketing campaigns:

Sephora: Via its branded app, the beauty retailer delivered prompts to customers, such as reminders about gift card balances, when they were close to a store.

Elle: The magazine teamed up with a shopping app, ShopAdvisor, to deliver push notifications to consumers when they passed retail stores carrying the editors’ recommended products.

Whole Foods: The supermarket placed geofences around a number of stores to deliver relevant targeted web ads to mobile users within a certain radius.

Subway: In the United Kingdom, the restaurant chain texted consumers (who had opted in) coupons for discounted food when they were near a location.

El School of Professional Makeup: The Los Angeles school created a Facebook campaign which was only delivered to 18- to 35-year-olds who expressed interest in makeup and who lived within driving distance of the school.

Why Should My Brand Be Geofencing?Finally, what is it about geofencing that gets people so excited? How can it help your marketing efforts?

There are four major benefits to geofencing:

Targeting: The fundamental advantage of geofencing is that it makes your messaging much more relevant and timely. By reaching people who are on the move and geographically nearby, and by layering other targeting criteria on top, you’re much more likely to engage consumers.

Spend Effectiveness: Better engagement leads to more effective marketing spend. With geofencing, you’re able to reach the audiences most likely to take action, which means less budget spent on less relevant consumers.

Better Data: A benefit of geofencing that’s often overlooked is the data it provides. With the right platforms, you’ll be able to collect valuable information on traffic patterns (when people are in/near your locations), stay durations, and messaging effectiveness.

Better Attribution: Geofencing provides the missing link that many marketers have long wanted: the connection between advertising and action. Because the technologies allow you to see both when an ad was seen and what what the consumer did next, it’s possible to see exactly the impact of your messaging. That’s a big help in determining ROI.

The benefits of geofencing aren’t separate, but rather intertwined. Better targeting, better data, and better attribution lead to more effective spend.

Moreover, this effect snowballs: with more resources, time, and information, your brand will be able to geofence better, leading to more engagement and even more budget savings. Ultimately, it’s an approach that can truly be transformative and a major win for many businesses.